Mutual Fund NFOs Hold the Lead Over IPOs

Mutual funds (MFs) through New Fund Offers (NFOs) have taken the lead over the Initial Public Offers (IPOs) in the first 10 months of 2023.

MFs have raised about Rs 51,399 crore in 10 months and ended October 2023 through 142 NFOs, as compared to Rs 32,200 crore accumulated through IPOs during the same period. Moreover, about 10 of the 40 IPOs completed in 2023 have been worth more than Rs 1,000 crore.

On the other hand, riding on the bull run in the markets, mutual funds have Rs 28,429 crore through equity NFOs, the highest being Rs 10,516 crore in the September quarter.

Of the equity offerings, thematic funds maintained their lead with 22 NFOs mopping up Rs 12,372 crore, while five flexi-cap and six multi-cap funds raised Rs 2,478 crore and Rs 7,220 crore, respectively.

At the same time, IPOs in the March quarter were introduced by a mere four companies, raising about Rs 880 crore, while MFs invested Rs 20,173 crore through 57 NFOs in the same period.

Hybrid NFOs emerged as a preferred choice over debt funds, which suffered due to the removal of indexation benefits when computing Long-Term Capital Gains (LTCGs) in April 2023.

The NFOs in the hybrid category mopped up Rs 9,684 crore with an inflow of Rs 7,480 crore in the September quarter of 2023.

Despite the run-up in equity markets, MFs have managed to raise Rs 9,863 crore through debt fund NFOs, with a major inflow of Rs 6,061 crore and Rs 3,602 crore coming in during the March and September quarters of 2023.

Similarly, passive funds, including Fund of Funds (FoFs) investing overseas, received an investment of Rs 3,287 crore during the NFO, with 31 index funds raising Rs 1,917 crore in the March quarter of 2023.